China, A Publicly Traded Company


During the past month, the Chinese Communist Party (CCP) celebrated its centennial anniversary. Like many large encompassing macro-scale organizations – say like a large predominating political party or a market-enveloping corporation, its beginnings were humble and inconspicuous. Just like the beginnings were for Hewlett-Packard in that fateful Palo Alto garage so many decades ago, or just as the start for that now fabled marketing innovation was for Jeff and Mackenzie in their own little garage in Seattle.

So, the CCP first saw the first light of day at 106 Rue Wantz, situated in the French Concession in Shanghai, in an obtrusive apartment building, where the founders had gathered. They were a small group, which the Economist magazine nicely details in a recent survey on China, but they had a kind of modest venture capital backing, just like other fortunate start-ups get. Two representatives from the Soviet COMINTERN were present at the meeting, and offered initial financial support.

Of some interest, maybe the COMINTERN were anticipating Markowitz and Modern Portfolio Theory, since they seemed to seek diversification, providing support for the Nationalists as well.

In any event, the Chinese Communist Party, an aspiring vendor – as it were – of political order and direction to the Chinese people, were in business.

As with any business, management styles can change – sometimes in response to signals in the market, sometimes due to marketplace shock, sometimes as a function of owner/managerial inspiration or even eccentricity. For any company, management is important.

A few years ago, I was reading a Bloomberg news feature profiling the career and ascent of Xi Jinping, China’s chief executive. The Bloomberg article recounted Xi’s steady rise – his progressive appointments and tenure in different positions: being installed in one position, only then after a few years to be appointed to another carrying more responsibility. It struck me then, and the notion stayed with me, that Xi had been groomed just as any up-and-coming senior executive at a large multinational would be. Some indeterminate locus of CCP leadership was testing and vetting Xi, and possibly others, on who would be top dog. Lots of hallway discussion, there must have been, in the corridors of power.

During my life, I’ve been, to be fair, a mid-level worker at three large financial organizations. At each, there was always much scuttlebutt and water-cooler talk on company leadership, as the financial-services rank and file are inclined to do, and on prospects. On when “Dave” might be stepping down, on whether or not it was likely that the CFO appointment would put “Stan” in line, on maybe “Arshad” still having a chance at the top billing. Who knew? People just watched and surmised. We were all “Kremlin watchers” of a sort. At another institution, people always wondered who might be tapped to follow company leader “Blake”, who was thoughtful and vaguely stoic, an intelligent and preternaturally calm man. Being really tall, the guy also looked great in a suit.

As you’ve been reading, you can see we always referred to these grandees by their first names – their pithy, lapidary handles – “Blake”, “Dave”, “Stan”. Much like, say, when people referred to “Stalin” or “Molotov”, noms de guerre derived from the Russian for “steel” and “hammer”, in another far flung corporate-political environment distant in time and space.

Overarching it all, though, there may have been some manifest cult of personality – more so in some situations and much less so in others, but still there – as people readily used these familiar, simple, direct names, since people recognized intimately the power personified in these individuals and in what they could do in the organization and to them.

And so, Xi Jinping made his way through the upper ranks, taking on regional political leadership assignments in Hubei (1982-1985), Fujian (1985-2002), then on to an appointment at Zhijiang (2002-2007), being, I suppose, tested for his mettle along the way. A decisive promotion was Xi’s appointment to the Politburo Standing Committee of the CCP during the 17th Party Congress in October 2007. Finally, Xi was tapped as General Secretary in 2012, thereby assuming party leadership and leadership of the country.

Xi Jinping is China’s executive leader – without say, having to contend with the countervailing levers of power from conceptual (and actual) legislative and judicial branches of government. Xi really is like a CEO for a large financial-services firm.

And the analogy continues. Just as leadership succession is murky and undefined at large companies, so it may be in the People’s Republic of China. And, just as companies don’t weather the verdict of mass suffrage, so too is the leadership of China freed from that constraint.

But even if there are not voters, there are still company stakeholders – those who have a stake in how well or not the concern is run. Companies must deal with owner-shareholders (who actually do have “voting rights”, depending on the class of share), customers importantly, the extant community, lenders, regulators, activists, even opinion-makers. But the accountability to those stakeholders is not always clear, and its implementation sometimes messy.

The Chinese leadership must contend with and parse the intentions of its stakeholders, too. These stakeholders may not be engendered in the mass democratic franchise, but they are still there, gauging how well the concern is being run. They are in the form of the CCP rank and file & its senior administrators, in the military, in the skittishness of foreign investors and trading partners, in fickle domestic capital, in the choices of residents to abide, flee or dissent, despite myriad controls. And how accountability can be clearly articulated and what implementation could involve might have to be worked out.

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